U.S. SBA Returns from Shutdown with a New SOP 50 10 5, Effective April 1st

Minor Revisions to Environmental Policies and Procedures

Just three weeks after the federal shutdown ended, the U.S. Small Business Administration issued a new SOP 50 10 5. Version (K) will supersede the current version J when it becomes effective on April 1, 2019. Below is an advance look at the key areas of change under the agency’s environmental policies and procedures document.

About SBA SOP 50 10 5 

The SBA’s SOP 50 10 5 contains the agency’s policies and procedures governing the CDC/504 and 7(a) loan programs. The policies outline the steps that SBA lenders and CDCs must follow for environmental investigations using a tiered process ranging from an environmental questionnaire all the way up to a Phase II environmental site assessment. The SOP also includes the SBA’s NAICS Code list of environmentally sensitive industries. This list is important as a property’s current or past operation in any of these industries automatically dictates that the environmental investigation begins with a Phase I ESA by a qualified environmental professional.

New Revisions to the SBA’s Environmental Policies and Procedures

Based on the SBA Information Notice that went out on February 15th, the latest version K—the 11th update to the original SOP 50 10 5—reflects the following changes to the environmental policies and procedures:

  • Added guidance for instances when the environmental professional recommends proceeding from the Transaction Screen to a Phase II ESA

  • The new policy splits out separate sections for the three Special Use Facilities: child-occupied facilities, drycleaners and gasoline stations. Notably the new version (K) does not limit lead risk assessments and testing for lead in drinking water only to child-occupied facilities constructed prior to 1980. Readers will also see new language that lead assessments must comply with EPA and HUD guidelines.

Note that the references above pertain to the 7(a) program. The new SOP 50 10 5(K) also adds similar language in Subpart C to be followed under the Section 504 Certified Development Company Loan Program.


In Fiscal Year 2018, which ended on September 30th, 2018, volume under the SBA’s 7(a) program fell slightly for the second consecutive year after peaking in FY16.  Based on year-end data on loan approval volume, Live Oak Banking Company, Wells Fargo Bank and The Huntington National Bank were the dominant 7(a) lenders last year with $425 million, $249 million and $208 million, respectively.


In addition to the revisions to the SBA’s environmental policies and procedures noted in this brief, be aware that this update to the SOP also provides additional guidance and incorporates revisions to conform to changes in SBA regulations and loan program requirements including, but not limited to, the Final Rule on Debt Refinancing in the 504 Loan Program, the addition of a 25-year Debenture in the 504 Loan Program, and revisions to guidance on credit elsewhere, minimum equity requirements for certain 7(a) loans, and the eligibility of marijuana-related and hemp-related businesses issued in SBA Policy Notice 5000-17057.

  • The new SBA SOP 50 10 5(K) policy is available here. Version K will become effective April 1, 2019, and will apply to all applications received by SBA on or after that date. Participants must continue to use SOP 50 10 5(J) for SBA 7(a) and 504 applications submitted through March 31, 2019.
  • Questions and any comments concerning the new version K should be directed to the Lender Relations Specialist in the local SBA Field Office. The local Field office can be found at https://www.sba.gov/tools/local-assistance/districtoffices.
  • Questions or comments may also be submitted to 7aQuestions@sba.gov or 504Questions@sba.gov.
  • Lenders, CDCs and other interested parties may continue to send suggestions concerning the SOP to SBA at SOP50-10Modernization@sba.gov. (This e-mail box is set up to receive only.)

Download EDR’s updated SBA process flow diagram (step-by-step instructions for conducting environmental due diligence on SBA loans), or to get information on our LoanCheck RSRA solution.